Project #53574 - Finance Spreadsheet

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Concept Assignment #4

Before beginning this exercise, make sure you have viewed the lecture posted in the helpful hints folder giving specific information for this concept assignment.

Megan and James just turned 50 and are asking you for investment advice. It is clear when looking over their accounts that they need some serious help! Megan wants to earn a high rate of return on the portfolio saying “I’m a risk taker and need to make a lot of money” while James tends to prefer something secure with a guaranteed return. Presently, as they disagree so vastly on their investing philosophies, 100% of their money is sitting in cash (it’s not invested). Here are their assets:

James 401K - $150,000

Megan Trading account - $30,000

James Roth IRA - $35,000

James IRA - $18,000

CD - $25,000

Megan 401K at her old job - $67,000

Checking and Savings total $17,000

Megan and James have about $1,500 every month left over after paying for expenses.

When advising a client on how to invest their money there are two questions you have to answer – 1) WHERE do they put their money and 2) WHAT do they buy with their money.

List out as many different specific “WHEREs” (or account types) as you can think of that might be appropriate for a client to save or contribute money to

List out at least 15 specific WHATs (investment types) you could advise someone to purchase with their dollars

Given Megan and James’s disagreement, how do you approach them about taking risk vs. not taking any risk in the portfolio? Explain specifically how you would educate each of them about the different types of risk and what risks are appropriate and not appropriate.

Explain in your own words, not the book, exactly what a mutual fund is.

Are mutual funds appropriate for Megan and James? Why or why not?

Using your approach in questions 1 and 3, create an investment strategy for them including:

Details about how each of the accounts should be invested. Make sure to say what specific types of investments should be purchased, for how much and in which accounts. Feel free to use excel, charts, etc to support your stance. I expect a thorough investment analysis.

Justify your answer

What should they do with the leftover $1,500 each month? Make sure you answer both WHERE and WHAT specifically they should do. Thoroughly justify your answer.